Tread carefully with MMC-Gamuda contract issue

Opinion  |  P Gunasegaram
Published:  |  Modified:

QUESTION TIME | Until Tony Pua threw in his 10 sen worth in an open letter in the war of words between MMC-Gamuda and Finance Minister Lim Guan Eng over the MRT2 project, it seemed that the former was beginning to get the edge over the latter. Pua is Lim’s political secretary.

It is a complicated issue and one needs to read closely the carefully hedged statement by MMC-Gamuda as well to understand the nuances behind the two arguments to be able to have an informed opinion as to who is right and who is wrong.

But looking through both statements, one cannot help but wonder if there is a game of brinkmanship involved in the cancellation of part of the contract and whether there will be further costs incurred from any compensation to be paid to MMC-Gamuda.

The dispute between the two relates to the MRT2 project in Kuala Lumpur approved by the previous government in February 2014. The construction costs were RM22.64 billion for the above ground portion and RM16.71 million for the underground portion, a total of RM39.35 billion.

With all the talk about overpriced contracts, one of the goals of the new Harapan government, and in particular Lim, was to cut down on contract prices. This they did with a creditable RM5.22 billion savings or some 23% of the original above ground contract cost of RM22.64 billion even though some of the savings may have been as a result of specification and down-sizing changes. The number of stations were maintained though.

But Lim simultaneously announced that the remaining 60% of the underground portion was cancelled because no agreement could be reached with MMC-Gamuda on the new contract price and that a new international tender for this will soon be called, the tender for which the company could participate in....

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